Discussion
Wurls said:
Digga said:
Wurls said:
Someone not so eloquent said:
..in which interest rates can be set administratively to encourage bank lending ...
Banks are encouraged to lend by surety of repayment. Its borrowers who are encouraged to borrow through low interest rates.Was it Peston by any chance?
te, but another (equally wooly thinkning) gobste; Martin Wolf of the FT.He's quote here: http://papermoneycollapse.com/2011/09/faster-pussy...
Fittster said:
From that link:
What is interesting is to compare a couple of periods on that graph. The recession in 1992 stands out as a short period of increased government spending, followed by a rapid reduction and then a short period of surplus. Remember that although it is shown in red, Labour were following the spending plans of the previous government there. The scary thing, is that the level of spending then goes straight back to the sort of level as in the previous recession except that it is the middle of a massive boom period. When the next recession inevitably hit, there is no option but for borrowing to explode resulting in a financial disaster.
Fittster said:
fbrs said:
Fittster said:
The country was debt free in 1997? There were no public sector pensions prior to Tony Blair? Gordon Brown invented the welfare state?
1997 2007 2010
National Debt (Bn) 348bn 500bn 776bn
Budget Deficit (Bn) 0bn 84bn 171bn
Unfunded public pension liabilites 270bn 730bn 886bn (2009)
Personal Debt (Bn) 503bn 1346bn 1460bn
Balance of trade (Bn/yr, + is surplus) +4.4 -44.9 -34.2
thinfourth2 said:
I can't wait to get these idiots out of office
you just can't trust labour with the econmoy
Oh we've already had an election i hadn't noticed
Don't worry, you'll be nothing to do with Westminster by the next election and will have proper socialists expecting you to fund their redistribution of your wealth. you just can't trust labour with the econmoy
Oh we've already had an election i hadn't noticed
fbrs said:
what's your point? please take 5 seconds to look at the other numbers. the previous government was a fvcking disaster, no 2 ways around it.
The point is that PH needs to get it's head out of blue tie/red tie tribalism. Both parties have consistently run budget deficits. The problem is with the system rather than the players. While politicians bribe there support basis nothing is going to change.Fittster said:
The point is that PH needs to get it's head out of blue tie/red tie tribalism. Both parties have consistently run budget deficits. The problem is with the system rather than the players. While politicians bribe there support basis nothing is going to change.
couldn't agree more. (with the caveat that the players are a fvcking shower of st)Can I ask a dumb question?
What's the opposite of QE?
At what point does all this newly created money (75BN) 'disappear' or essentially become 'irrelevant'?
What goes away, or what has to catch up?
As Hugh used to say 'It's a question!'. I'd rather have Mark (the sparrow) running the EU at the moment - at least he had some vision... the rest are just running around 'sticking pictures of Justin Timberlake onto rucksacks'.
What's the opposite of QE?
At what point does all this newly created money (75BN) 'disappear' or essentially become 'irrelevant'?
What goes away, or what has to catch up?
As Hugh used to say 'It's a question!'. I'd rather have Mark (the sparrow) running the EU at the moment - at least he had some vision... the rest are just running around 'sticking pictures of Justin Timberlake onto rucksacks'.
Fittster said:
fbrs said:
what's your point? please take 5 seconds to look at the other numbers. the previous government was a fvcking disaster, no 2 ways around it.
The point is that PH needs to get it's head out of blue tie/red tie tribalism. Both parties have consistently run budget deficits. The problem is with the system rather than the players. While politicians bribe there support basis nothing is going to change.Possibly another dumb question - I'm trying to understand what Quantitive Easing is, could someone take a look at this and tell me if I got it right?
The Bank of England creates £75B of new money on it's computers, with permission from the government (the Treasury). The hope is that it can boost the economy and increase spending by buying government bonds (from the Treasury).
However, it's not allowed by law to buy them itself, so it has to buy them from the secondary market (banks, insurance companies and pension funds). This new demand increases the price, giving the banks, insurance companies and pension funds a profit. It increases their reserve asset ratios too.
It also reduces the yield on these bonds, making other investments more attractive, for example lending to companies or individuals. This might lead to lower interest rates for borrowers, due to increased competition. However the previous £200B of QE seems to have gone mainly into equities & commodities (for example gold), the latter creating inflation. And even more inflationary is that it will devalue the pound against other currencies.
So in summary, QE is good for creating hope amongst the masses, it's good for the financial institutions who will profit from it, could be good for net exporters, and possibly also the UK tourism industry. It gives more breathing space to those institutions and individuals who have borrowed beyond their means, but it's another kick in the teeth for net savers, taxpayers, and the poor.
Did I get any of that right?
The Bank of England creates £75B of new money on it's computers, with permission from the government (the Treasury). The hope is that it can boost the economy and increase spending by buying government bonds (from the Treasury).
However, it's not allowed by law to buy them itself, so it has to buy them from the secondary market (banks, insurance companies and pension funds). This new demand increases the price, giving the banks, insurance companies and pension funds a profit. It increases their reserve asset ratios too.
It also reduces the yield on these bonds, making other investments more attractive, for example lending to companies or individuals. This might lead to lower interest rates for borrowers, due to increased competition. However the previous £200B of QE seems to have gone mainly into equities & commodities (for example gold), the latter creating inflation. And even more inflationary is that it will devalue the pound against other currencies.
So in summary, QE is good for creating hope amongst the masses, it's good for the financial institutions who will profit from it, could be good for net exporters, and possibly also the UK tourism industry. It gives more breathing space to those institutions and individuals who have borrowed beyond their means, but it's another kick in the teeth for net savers, taxpayers, and the poor.
Did I get any of that right?
Edited by -Pete- on Thursday 6th October 16:03
Gargamel said:
Instead of wasting the time giving the money to the banks, why not take the £75bn and cut income tax down to 35% and 15% for a few years. Much greater impact and a vote winner too.
Its not for us its for the government to esentially pay its bills, to pay the bit we cant stretch to out of the general taxtaion WE pay for. But heres the rub we pay again! In the form of inflation and eventually higher taxtation. How will the markets feel about this?.
markcoznottz said:
Its not for us its for the government to esentially pay its bills, to pay the bit we cant stretch to out of the general taxtaion WE pay for. But heres the rub we pay again! In the form of inflation and eventually higher taxtation. How will the markets feel about this?.
Why - It just doesn't have to be this way. The Government has the ability to whistle up more money. if it uses "new" money to pay its existing debt then it can afford to NOT collect the coin back in from general taxation.
The scope and instruments are there, we just choose not to help direct money to people. Look up the origins of the word Greenback if you are still confused.
The opposite of QE is the Government buying it's own gilts back with real money (ie redeeming them)
Gargamel said:
markcoznottz said:
Its not for us its for the government to esentially pay its bills, to pay the bit we cant stretch to out of the general taxtaion WE pay for. But heres the rub we pay again! In the form of inflation and eventually higher taxtation. How will the markets feel about this?.
Why - It just doesn't have to be this way. The Government has the ability to whistle up more money. if it uses "new" money to pay its existing debt then it can afford to NOT collect the coin back in from general taxation.
The scope and instruments are there, we just choose not to help direct money to people. Look up the origins of the word Greenback if you are still confused.
The opposite of QE is the Government buying it's own gilts back with real money (ie redeeming them)
Where:
- G is government spending
- T is taxes
- S is savings
- I is investment
- NX is net exports
The Excession said:
Can I ask a dumb question?
What's the opposite of QE?
At what point does all this newly created money (75BN) 'disappear' or essentially become 'irrelevant'?
What goes away, or what has to catch up?
...
The idea is that when it all gets better, the bonds that have been purchased with the QE money can be released back into the market and so the QE money destroyed as easily as it was created.What's the opposite of QE?
At what point does all this newly created money (75BN) 'disappear' or essentially become 'irrelevant'?
What goes away, or what has to catch up?
...
But of course in the real world this hasn't happened yet with the £200b that has already been done!
Gargamel said:
markcoznottz said:
Its not for us its for the government to esentially pay its bills, to pay the bit we cant stretch to out of the general taxtaion WE pay for. But heres the rub we pay again! In the form of inflation and eventually higher taxtation. How will the markets feel about this?.
Why - It just doesn't have to be this way. The Government has the ability to whistle up more money. if it uses "new" money to pay its existing debt then it can afford to NOT collect the coin back in from general taxation.
The scope and instruments are there, we just choose not to help direct money to people. Look up the origins of the word Greenback if you are still confused.
The opposite of QE is the Government buying it's own gilts back with real money (ie redeeming them)
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